Premier Oil shares could rebound ahead of earnings, Brent price down

Premier Oil is set to unveil its half-year (H1) results on Thursday 20 August, with analysts from Peel Hunt believing the stock could push higher despite Brent crude turning lower this week.

Analysts from Peel Hunt actually upgraded Premier Oil to a ‘buy’ rating and issued a target price of 50p per share ahead of the company’s H1 results, implying a potential upside for the stock of 47%.

For the share price to rebound that strongly, investors will need to see that Premier Oil has made significant progress with reducing the amount of debt on its balance sheet. Investors will also be eager for an update on the company’s acquisitions and related funding.

If Premier Oil can impress investors in its upcoming H1 earnings, its share price could begin to show signs of a recovery. However, with oil prices subdued amid demand and oversupply concerns the UK-based oil and gas company has an uphill battle ahead of it.

Premier Oil is trading at 34p per share at the time of publication, with the stock down 64% year-to-date.

Brent crude oil prices continue to trade below $45 a barrel

The price of oil slipped below $45 a barrel last week and continues to fall on Monday, with the market weighed down by investors concerned about whether demand will rebound amid oversupply and the coronavirus pandemic.

Adding to investors’ concerns, the International Energy Agency (IEA) and the Organisation of Petroleum Exporting Countries (OPEC) slashed their forecasts for oil demand in 2020 last week.

Brent crude is trading 24 cents lower at $44.56 a barrel at the time of publication, while the US West Texas Intermediate (WTI) is down 18 cents to $41.83 a barrel.

Brent crude turning lower, but bullish resurgence looks likely

Brent crude has similarly managed to break through a key resistance level, with price breaking through the $45.26 resistance level to bring about a potential bullish breakout signal, according to Josh Mahony, senior market analyst at IG.

‘From a wider perspective, we continue to create higher lows, and thus the break through this level does signal the potential for another move higher from here,’ Mahony said. ‘It is worthwhile noting that we have recently seen lower highs too, meaning that a break through $45.83 would ultimately be required to signal a wider bullish break coming into play.’

‘Nevertheless, with price heading lower, it looks attractive to buy into this pullback,’ he added. ‘Look out for potential support to come into play around the 61.8% and 76.4% Fibonacci levels. This bullish outlook would be negated with a break below the $44.76 support level.’

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4. Click on ‘buy’ or ‘sell’ in the deal ticket
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